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ACCA Strategic Professional · Advanced Performance Management · Performance improvement models and techniques

Alder Foods maps a production process with total elapsed time of 20 hours per batch. Analysis shows value-adding activity of 4 hours, necessary non-value-adding activity (such as mandatory safety checks) of 3 hours, and the rest being queuing, rework and waiting. Management plans to eliminate all waste but keep the necessary non-value-adding activity. What will the new elapsed time be, and what would the process cycle efficiency be on the original basis (value-adding time divided by total time)?

The new elapsed time will be 7 hours and original process cycle efficiency is 20%. Waste of 13 hours is removed, leaving 4 hours value-adding plus 3 hours necessary activity. Efficiency counts only value-adding time: 4 divided by 20 hours equals 20%.

  1. A7 hours new time; original efficiency 20%Correct
  2. B4 hours new time; original efficiency 35%
  3. C7 hours new time; original efficiency 35%
  4. D13 hours new time; original efficiency 20%

Explanation

Eliminating the waste (20 - 4 - 3 = 13 hours) leaves 4 + 3 = 7 hours. Original cycle efficiency is 4/20 = 20%. Option 4 wrongly removes only the necessary time, option 2 drops the necessary activity, and option 3 uses 7/20 = 35% as efficiency by counting necessary non-value-adding time as value-adding.

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